Business Intelligence

As with many things, the introduction of the wide use of computers in business has strongly increased the availability of business intelligence. Business intelligence, also referred to as BI, is a combination of technologies, theories, and architectures that have the ability to transform raw data into meaningful and useful information for business to utilize. More simply put, CIO.com defines it as “an umbrella term that refers to a variety of software applications used to analyze an organization’s raw data. BI as a discipline is made up of several related activities, including data mining, online analytical processing, querying and reporting” (Mulcahy; CIO.com). Business intelligence has the ability to handle an incredibly large amount of amorphous data that it is then able to utilize to develop, identify, and create new strategic business opportunities. The use of business intelligence allows a company to easily interpret large volumes of this data (Wikipedia, 2014). This can allow those employed with a company to more easily identify new opportunities and then implement an effective strategy, providing a competitive market advantage and long-term stability.

According to research from the analyst firm Gartner, between 70% and 80% of corporate business intelligence projects fail (Goodwin, 2011).  This large failure rate is due mainly to a combination of poor communication between the business and IT and the failure by the organization “to ask the right questions or to think about the real needs of the business” (Goodwin, 2011). According to Robert Miller, in Tech Decision Maker (2011), implementation issues include a lack of the following:

  

• Defined functional groups – These are very important because different business units use information for different purposes.  If these groups are not accurately divided into functional groups, the BI users will not know their roles or be invested in the successful implementation.  These functional groups must also be trained effectively (Mulcahy).  Poor training will certainly negatively affect implementation.
• Common ground – This means that all functional groups agree on the meaning of key terms, such as gross profit and gross margin.  Without such an agreement, a language barrier develops hindering successful implementation.
• Clear conceptual mapping – The whole project should be mapped out, with a clear beginning and end.  Additionally, since each functional group uses the information differently, BI objectives should be mapped out to show how each group will use the information, which will allow for better decision making.  Clearly define the ROI, outlining specific benefits the organization expects to achieve on a time line (Mulcahy).
• Organically related data –The reporting from BI depends on accurate and reliable data, therefore, BI and the data must be in sync and the data must be clean.
• Tools selection – BI components, such as data integration, analytics, and portals, should be cataloged because each affects the successful implementation.
• Technology partner – A vendor should be selected that is “both knowledgeable in the advancement of both relevant software and hardware components and equally well versed in end user requirements and objectives” to support the organization.  A lack of knowledgeable support can significantly hinder an organization in the time it takes to complete tasks.
• Evolving deliverables – There will be timelines and due dates set for the implementation.  It is important that the organization keeps to the preselected milestones to get the implementation started.    Adjustments can be made as needed.

Check out this video from Gartner analysts on poor communication between the business and IT and the importance of tools selection:

http://bcove.me/8xyfs0js

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Cultural issues can also hinder successful implementation.  People can be resistant to change and learning new things.  They don’t want to learn new things or change the way they do something unless the current way doesn’t work anymore or is extremely time consuming.  Also, if users do not see the benefits of implementing BI and think the challenges of learning it and getting comfortable with it outweigh the benefits, then successful implementation is not likely.  End users must be behind the initiative and support it, or it is not going to work.  (Rabie, 2010)

Even though the implementation and use of BI has become more widespread and more accessible, it is still something that can cost a pretty penny to implement into the everyday use in a business.  With BI, there is a large range of options, though.  Boris Evelson, in his blog, tried to come to a conclusion on how much a single BI report can cost a company.  His analysis shows the complexity and range of putting a cost on business intelligence.  His range was from $1,840 for a single report carried out by a single FTE, all the way up past $15,000 if looked at from a top down fully loaded analysis of creating one BI report (Evelson; Forrester)   The rule of thumb for business intelligence, as mentioned by James Standen, is that cost of effort and service is five times the software costs (Standen; Datamartist).  The Computer World report prepared this chart, showing the difference in how small companies are choosing to fund their BI centers versus larger companies:  

This shows that companies are realizing how important it is to invest into BI and are finding their own ways to fit the bill to make it work. 

            The benefits for investing in business intelligence are wide ranging, but seem to be very similar within the different sizes of businesses.  Within the same ComputerWorld report, they took a look at how the two different sized companies felt they would benefit by investing into BI.

 

To simply list the ways companies believe they would benefit from BI does not simply do it justice.  Being a visual person myself, I like to present examples for how things would work in real life.  The following is a chart used in a case study by Borut Hočevar and Jurij Jaklič titled “Assessing Benefits of Business Intelligence Systems – A Case Study”.  The chart they used was originally used by Caver & Ritacco 2006.  

The flow chart shows a detailed example of how one would use BI to investigate a simple problem by digging deep to find the original source.   While this is just one small example of how BI is used in business, it does show how it looks much deeper than one usually looks and it is a way to increase sales and business efficiency.   

References:

Goodwin, B. (2011, January 10). Poor communication to blame for business intelligence failure, says Gartner. ComputerWeekly.com. Retrieved June 25, 2014, from http://www.computerweekly.com/news/1280094776/Poor-communication-to-blame-for-business-intelligence-failure-says-Gartner

Miller, R. (2011, September 13). Successful BI deployments have these elements. TechRepublic. Retrieved June 22, 2014, from http://www.techrepublic.com/blog/tech-decision-maker/successful-bi-deployments-have-these-elements/?tag=content%3Bsiu-container

Mulcahy, R. (n.d.). Business Intelligence Definition and Solutions. CIO. Retrieved June 22, 2014, from http://www.cio.com/article/40296/Business_Intelligence_Definition_and_Solutions?page=4&taxonomyId=3002

Rabie, G. (2010, August 9). 10 Reasons Why BI Projects Worry IT Managers. Yellowfin. Retrieved June 22, 2014, from https://www.yellowfinbi.com/YFCommunityNews-10-Reasons-Why-BI-Projects-Worry-IT-Managers-74171

Evelson, Boris.  “Bottom Up and Top Down Approaches to Estimating Costs for a Single BI Report.”

Forrester.com.  Accessed on June 21, 2014

http://blogs.forrester.com/business_process/2010/01/bottom-up-and-top-down-approaches-to

estimating-cost-for-a-single-bi-report.html

Standen, James.  “Estimating the Cost of Business Intelligence.”  Datamartist.  Accessed on June 22,

2014 http://www.datamartist.com/estimating-the-cost-of-business-intelligence

Mulcahy, Ryan.  “Business Intelligence Definition and Solutions.”  CIO.com.  Accessed on June 22,

2014 http://www.cio.com/article/40296/Business_Intelligence_Definition_and_Solutions

Computer World. “How Companies are Implementing Business Intelligence Competency Centers

(BICCs).”  Accessed on June 22, 2014 http://www.computerworld.com/pdfs/SAS_Intel_BICC.pdf

Hočevar, Borut & Jurij Jaklič.  “Assessing Benefits of Business Intelligence Systems – A Case

Study.” Accessed on June 22, 2014 https://www.efst.hr/management/Vol15No1-20 /5-Hocevar_Jaklic nfinal.pdf